Cruising and Covid-19

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• The cruise tourism market has been growing at an average annual rate of over 5% in the last decade, with 30 million passengers in 2019.
• The main destination markets are the Caribbean and the Mediterranean, which alone make up around 50% of available berths. The most significant passenger numbers are from the United States, Western Europe and China, with an overall share of over 75%.
• This sector generates a direct, indirect and induced global value estimated to be 150 billion dollars annually, directly employing over 1.2 million people.
• The market is particularly polarised, with the three main groups - Carnival, Royal Caribbean and Norwegian - making up 72% of the total in terms of turnover and almost 80% in terms of passengers.
• The global spread of the virus has been an unprecedented setback for the sector, with the closure of the most important tourist ports in all the main regions and most excursion activities suspended, apparently until September at least.
• In this context, share prices of the main cruise operators have fallen sharply (close to 80% on average) and significantly further than the drop in general indices.
• However, this sector is no stranger to sharp shocks and in the past has shown considerable resilience, fully recovering from contraction periods and performing better than the general indices. The cruise industry is dominated by highly profitable and flexible large companies who are able to respond well to periods of crisis.
• But this current crisis is unprecedented in terms of intensity and duration, making the sector's prospects particularly uncertain on both the demand front, a result of the damage to the cruise product image, and in relation to the sector's industrial structure, which could be heading into a new season of mergers and acquisitions.